Tax is a sum that you need to pay to the government so it can fund public services, like building roads, schools, and hospitals.
If you’re an individual taxpayer, the method by which you pay your taxes depends on how you earned your money:
There is also an additional type of tax that you pay when you spend money. This tax is called “VAT”, and it’s technically paid by the final consumer of a product or service. If you’re a sole trader registered for VAT, you collect VAT from your clients, deduct the VAT you’ve paid for eligible expenses, and then pass the VAT on to HMRC.
VAT stands for Value Added Tax. To learn more about VAT, visit our helpful glossary page outlining the topic.
Of course! We advise that you start a comprehensive spreadsheet to keep track of your taxable income and relevant expenses throughout the year in order to make your tax return more straightforward. This can be done on an Excel spreadsheet or Google sheet to keep things simple! Contact our team for more advice today!